The Conversation: Christopher J. Annas, Meridian Bank

Chris Annas is no 20-something startup kid. He's 57, with two grown daughters. But he brings an entrepreneur's energy to his work, which right now has him running Chester County-based Meridian Bank. He was recently spotlighted in the Philadelphia Business Journal as part of a story on fast-growing startup banks in the Philadelphia region. The Berks County connection: He revived the Meridian name in 2003, and he's looking to attract business customers here this year. Annas sat down recently to talk about growth, community banking and the current regulatory environment. Watch the whole interview at businessweekly.readingeagle.com.

Business Weekly: Talk about the environment for small community banks. I keep hearing it's a tougher go with all the new rules.

Chris Annas: Well, I think that well-run community banks can sustain themselves through some of these changes that Dodd-Frank and other regulatory issues will bring on. I know that a bank at $100 (million)-$150 million dollars in asset size can be profitable. The new (regulations resulting) from the downturn (are) going to put a crimp in profitability a little bit, but they can still sustain. We are about $480 million in assets right now. So I think we are a pretty good example of someone who adjusted to the new world and been successful.

BW: And what's your strategy been for doing that?

Annas: The strategy has really been to serve the small-business market. We don't have a lot of branches. We really have just three. When a small-business person comes to our branch, we hand them a check scanner, which everybody uses now, and we teach them how to bank online. But we don't really want them to come to the branch, because that ends up taking an hour to stand in line, deal with the teller, work with cash, do all of those things. We're also handling a lot of the (various) payment methods that a small-business owner uses now.

BW: You don't have a presence here in Berks County?

Annas: Not yet.

BW: But you're hoping to grow business here?

Annas: Absolutely.

BW: How do you do that without branches?

Annas: We are opening up a location. We (hired) two individuals, one that has been in the area for 30 years; another we just hired from a local competitor bank in Reading.

BW: Back in October, the Federal Deposit Insurance Corp. issued a consent order. What were their concerns, and how have you responded?

Annas: It was a compliance-related order, rather than something that was related to a loan problem or deposit issues. We have gotten into business that really was working with third parties in the merchant-processing business. With the new federal (rules requiring banks to) track money in a better way, they didn't want us to deal with third parties anymore. We had at that time about 15 (independent sales organizations, or ISOs) maybe dealing with 14,000 merchants. We're entirely out of that business now. We are dealing with our own merchants at our bank individually, singly.

BW: And what has that meant for your business operations?

Annas: It has reduced some of our balances and some of our noninterest income in pushing out that business. But for our direct merchants, it has had no effect whatsoever. We just quit dealing with the third parties to get away from having that middleman in there.

BW: Do you think this is unnecessary government regulation or sound oversight of the banking industry?

Annas: In this instance, with these ISOs, we agree with the FDIC that we should get out of this, and that somebody like a Wells Fargo can better deal with an ISO. So we're OK with that. But following all the rules does cost. We had one compliance person 18 months ago, and now we have three and a half. So (there needs) to be a balance to this.